If the EU is serious about tackling tax havens, it needs to clean its own house first.

Battling the tax havens and legislative loopholes which plague the bloc would be a potent weapon against the continent's surging populists, who frequently invoke tacit agreements between political elites and fat cats to avoid taxation.

Tax avoidance costs EU countries hundreds of billions of euros—some estimates suggest as much as $1 trillion [€0.88 trn]; Europe loses as much as 20 percent of the corporate taxes to which it is entitled.

Widespread tax evasion also allows corrupt politicians and criminals to launder money and protect ill-gotten gains, but the continent's tax havens also undermine fair competition between EU states and encourage tax malpractice.

Dutch historian Rutger Bergman shed some light on the problem at the recent Davos World Economic Forum: "I hear people talking the language of participation, justice, equality and transparency, but almost no one raises the real issue of tax avoidance, right? And of the rich just not paying their fair share."

Secretive 'tax limbo' freeports

The EU will be unable to lead the global fight against tax evasion, however, while there are still tax havens on EU soil, notably on some British islands and in Luxembourg.

Recently, members of the European Parliament raised concerns about the risk s presented by Le Freeport, a 22,000 square meter high-security facility located near Luxembourg airport, where goods can be stored with confidentiality—and without being taxed.

German MEP Wolf Klinz of the parliament's special committee on financial crimes, tax evasion and tax avoidance in early January sent the European commission president Jean-Claude Juncker an official request to take action against legal loopholes used for tax evasion and money laundering at Luxembourg's Le Freeport.

Last February, committee members and MEPs Ana Gomes and Evelyn Regner visited Le Freeport and called it a "black hole" with "a real lack of transparency".

He noted how "the Luxembourg facility opened in the same week that the OECD unveiled proposals to tackle multinational corporate tax avoidance. Critics argue that the growth [of] freeports represent a new battleground in the fight against tax avoidance by individuals."

Perhaps most notably, there are concerns that paintings and masterpieces could be stashed in freeports as a means of laundering money.

According to a recent report in the Art Newspaper, "the rise of art as an asset class has contributed to a sharp increase in freeports – from less than 100 in 1975 to around 3,000 in 135 countries in 2008".

A number of the world's biggest freeports, including Le Freeport Luxembourg, facilities in Geneva and Singapore are linked to Yves Bouvier, a Swiss art dealer who has been investigated in a number of jurisdictions for complicity in money-laundering and tax-evasion.

As a report by the European Parliamentary Research Service pointed out: "This concentration of a worldwide network of connected freeports and different roles could imply a risk of conflicting interests and insider trading. The fact that Mr Bouvier is entangled in an affair involving alleged fraud and insider trading may justify such considerations."

At a state-of-the-art laboratory in Lincolnshire, eastern England, a group of Chinese and British engineers enthusiastically discuss the development of the next generation insulated-gate bipolar transistor, which helps run, among other things, high-speed trains. The laboratory is owned by Dynex, a 63-year-old company that in the 20th century was Britain’s biggest high-voltage semiconductor maker before going into decline amid the global financial crisis in 2008.

Dynex was rescued after being acquired by Chinese train manufacturer CRRC Corp through its subsidiary CRRC Times Electric. This has resulted in a decade of investment to improve Dynex’s expertise in manufacturing and research and development.

Despite uncertainties over Brexit, Dynex and CRRC have invested $10-$12 million (£7.70-£9.25 million) annually in the R&D centre in Lincolnshire, with the latest components being used in CRRC trains. CRRC and Dynex are also jointly investing in a new innovation centre in Birmingham this year to develop chips for use in the huge electric car market in China and internationally.

The centre aims to employ 100 engineers this year, with the number set to rise to 200 to 300 in the next few years.

CRRC’s financial strategy provides a snapshot of continued Chinese investment in the United Kingdom, driven by companies’ desire to seek technological know-how, brands and new markets.

The law firm Baker McKenzie and research company the Rhodium Group say Britain was the largest recipient of Chinese outbound foreign direct investment last year, surpassing the United States, which has historically been the biggest recipient.

The joint report says that last year Chinese outbound FDI in Britain stood at $4.94 billion, followed by $4.8 billion in the US and $4.05 billion in Sweden. However, these figures are much lower than Chinese outbound investment in 2017, due to turbulence in the global economy throughout last year triggered by trade tensions and political uncertainties.

China's property investment overseas is expected to be little changed this year at $10-$20 billion (£7.7 billion-£15.3 billion), after volumes dropped 63 percent in 2018 in response to tighter financing conditions, according to a survey by real estate consultancy Cushman & Wakefield.

Chinese regulators have been clamping down on speculative overseas deals for the last few years as part of efforts to staunch capital outflows and keep debt risks under control.

According to Cushman & Wakefield's survey of 51 Chinese investors, 69 percent said they did not expect policy restrictions related to overseas property investment to ease in 2019, while 59 percent did not agree the domestic real estate lending environment would improve.

The consultancy expected capital flows from China would continue to be restricted, irrespective of geographic location.

In terms of investment destinations, 35 percent of respondents said they plan to invest in the United States in 2019, and 27 percent in countries which are involved in China's flagship Belt and Road (BRI) initiative which envisions linking Asian markets to Europe.

The UK and Australia followed at 24 percent each. Respondents were allowed to pick multiple potential locations.

Chinese investors in overseas real estate "are becoming more prudent and selective under the guidance of the government investment policies," said Jason Zhang, Head of China Outbound Investment & Advisory Services of Cushman & Wakefield.

Chinese investors continued to pool money into Singapore real estate after recording US$650m in acquisitions across four deals in 2018, according to a report from Cushman & Wakefield.

This puts Singapore as the fifth preferred overseas destination for Chinese real estate capital trailing behind the frontrunner Hong Kong which saw record US$9.5b in deals, United States (US$2.33b), Australia (US$1.74b) and UK (US$712m). Portugal, New Zealand, Italy, Cambodia and Germany round out the top ten.

In a survey, 14% of property investors from China intend to invest in Singapore in 2019 which is slightly more than the investor intention in Germany (10%), Canada (6%), New Zealand (6%) and Malaysia (4%) but less than US (35%), UK and Australia (24%) and Hong Kong (18%).

The top acquisitions in 2018 by Chinese real estate investors into Singapore include the $441m buy of Goodluck Garden condo by Perennial Real Estate and Qingjian International in November; the $157m purchase of Jalan Jurong Kechil development site in September and the US$38m acquisition of a development site located at 623A Bukit Timah Road in April.

However, the muted market environment brought about by the deepening trade dispute and tighter controls on capital outflow have pushed Chinese real estate investors more towards asset disposal than acquisitions. In fact, Singapore saw US$1.4b in sold assets in 2018 which includes the US$517m sale of an office 77 Robinson Road by CLSA Capital and the US$426m sale of an industrial site 20 Tuas South Avenue 14 by REC Group.

Cushman and Wakefield expects that favored markets like the US, UK, Australia and Hong Kong will continue to remain on the radar of Chinese real estate investors whilst investment into South Korea, Malaysia, Canada and outside the UK, Germany and Europe will remain unpopular over the coming months.

The latest FIRB report on foreign investment showed the US recorded a $10 billion increase in approved investment to $36 billion in 2017-18, with significant increases in real estate and the manufacturing, electricity and gas sectors.

China was the second largest source country with a $15 billion decrease in approved proposed investment to $23 billion.

The reduction in approved Chinese investment was due to falls across all investment sectors, especially property.

Chinese investment in real estate dropped to $12.7 billion in 2017-18 from $15.3 billion the year before, though China accounted for a quarter of foreign real estate investment.

Victoria gets the greatest share of Chinese residential investment, receiving 46 per cent of all approvals, with NSW in a distant second with 23 per cent, followed by Queensland’s 17 per cent. The data doesn’t track people who don’t need to request approval, which means NSW might be actually getting more investment.

Chinese buying is being impacted by several factors, local and international. There’s been the unexpected cancelling of promised mortgage loans by Australian banks, plus the higher foreign stamp duty taxes, along with Chinese government capital controls making it more difficult to move money from China, suggests Carrie Law, the boss of the Chinese property portal Juwai.

“We expect Chinese buying to be flat in 2019,” Law thinks.

I don’t think we ought regard the recent trend as permanent given tailwinds that will support Chinese buying, including the still-strong Chinese wealth growth.

There is the desire to get a bargain while the market is soft. Plus Law suggest there is a lack of investment opportunities in China, along with a possible shift in investment from the US to Australia due to any emerging trade war.

Additionally, the Yuan’s weakness is not holding back investment in property as there is an advantage in currency rates in favour of Australia compared to other major countries.

The Chinese also lack appealing alternative investments at home.

Interestingly, the Federal Government’s crackdown on residential properties held by foreigners in breach of the foreign investment rules uncovered just 131 now sold illegally held properties in 2017-2018. No nationalities were advised in the figure which was up slightly from the 96 ordered forced sales in 2016-17.

Total trade volumes in Dubai’s economic free zones grew by 22 per cent year-on-year in the first nine months of 2018, with the designated business hubs making a significant contribution to the emirate’s economy, a government body said.

Free zone trade hit Dh394 billion, accounting for 41 per cent of Dubai’s total trade during the period, according to the Dubai Free Zones Council, the authority that oversees the emirate’s 24 free-trade areas, which include Dubai International Financial Centre, Dubai Media City, Jebel Ali Port zone and others.

China topped the list of Dubai’s most significant free-trade partners with a total trade volume of Dh59bn over the period. Saudi Arabia was second with Dh34.2bn, closely followed by India with Dh34bn.

Total imports in free zones amounted to Dh215bn, while exports and re-exports totalled Dh179bn. Overall, the free zones generated 31.9 per cent of Dubai’s gross domestic product, the council said.

“Free zones are important economic hubs and centres of foreign direct investment that are poised for growth and expansion in the years ahead,” said Sheikh Ahmed bin Saeed, chairman of the Dubai Free Zones Council.

“Dubai’s economy relies on the free zones’ efforts to diversify the national economy and expand non-oil business in line with the Dubai Plan 2021, which aims to elevate the emirate’s global status and establish it as a major contributor to the global economy.”

“Every square kilometre to get fully developed needs around $800m to $1bn in terms of industrial base development and everything else. Our first phase has been around 50 square kilometres, including the port, and we’re talking almost around $17 to $18bn,” he added.

Mr Chaturvedi was speaking at the signing of a collaboration agreement between Kizad and Abu Dhabi National Oil Company (Adnoc) to develop a polymers park within the industrial free zone, adjacent to the $7bn Khalifa Port. The agreement, which follows Adnoc’s announcement last year of a downstream strategy, including plans to double refining and and triple chemicals capacities, will see the development of the park to diversify options for export of products, the state oil company’s downstream director Abdulaziz Abdulla Alhajri told The National on the sidelines of the event. Borouge, the UAE’s largest chemicals company, which is 60 per cent owned by Adnoc will also be part of the development of the polymers park, which is expected to be completed by 2025.

The park, which is expected to attract $1.5bn in investment over the next five years will use the facilities of the adjacent Khalifa Port and Cosco Terminal, launched last year, to reach export markets.

The burgeoning Chinese tech industry is looking beyond its shores to imprint its influence in tech, and has now set its sights on the West. The UAE sits at a midpoint as it sweeps across the globe, nearing its goal. But rather than let this global shift pass us by, the Emirates are fast becoming a central partner and collaborator on China’s path to world tech domination.

It’s no secret that China wants to become the world’s leader in tech; for years the country has invested hundreds of billions of dollars in technology such as artificial intelligence and autonomous vehicles, and are now said to be on the cusp of rivalling Silicon Valley in sheer scale.

The UAE for one, has welcomed the potential for collaboration. While 2018 numbers have not yet been released, in 2017, 1.3 million Chinese tourists arrived in the UAE. That’s a 45 per cent increase since 2013, according to data from international consultancy firm Colliers. The country has been quick to act on this rapid increase in Chinese interest. In fact, working with China has become a central pillar of the 50-year charter for Dubai, released by Sheikh Mohammed bin Rashid, Vice President and Ruler of Dubai. Among the nine visions he laid out in January, was a Silk Road that runs through Dubai.

That Silk Road would connect the East and West, and the North and South. “Our next goal is to build our own Silk Road in co-operation with our friendly neighbours who share our vision,” the document says.

It’s an extension of a wider plan that already has its wheels set in motion, with Emirati leaders placing tech at the centre of their post-oil development plans. Sam Blatteis, chief executive of The Mena Catalysts, which advises technology companies on policy and government affairs in the region, says it’s a “key part of the UAE’s long-term strategy, which requires skilled experts, capital, and technology, three resources China has deep reservoirs of.”

“Chinese companies have built a local footprint in all seven emirates, and their government affairs leads are quite adept at clearing the path for them. The country has become the single-largest foreign investor in the Middle East [with investments worth] $29.5 billion (Dh108.33bn) in 2016 and Chinese companies are following in President Xi Jinping’s path of building out global businesses in the UAE, rather than just shipping products from China,” he says.

Almost all tariffs on trade between the European Union and the world's third-biggest economy have been removed. European companies could save around a billion euros in duties each year.

A free trade agreement between Japan and the EU entered into force on February 1, covering 635 million people and almost one-third of the world's economy.

Dubbed the world's largest free trade agreement, the EU-Japan Economic Partnership Agreementremoves duties on almost all agricultural and industrial products and opens up the service sector and procurement. It also moves to eliminate non-tariff barriers to trade.

The highlights of the deal

Japan will have scrappped duties on 97 percent of goods imported from the EU once the agreement is fully implemented.

Open access to the Japanese market will save EU companies from paying €1 billion ($1.14 billion) of duties annually.

The EU will eliminate tariffs on 99 percent of imports from Japan.

In the automotive sector, the EU will eliminate duties over a seven-year transition period.

Both sides will eliminate duties on nearly all food and agricultural products.

The service market will be opened, including financial services, e-commerce, telecommunications and transport.

For the first time, the trade agreement includes countries' Paris climate deal commitments.

The text also addresses sustainable development and sets standards for labor, safety, environmental and consumer protection.

'Protecting brand names'

EU Trade Commissioner Cecilia Malmstrom said: "This agreement has it all: it scraps tariffs and contributes to the global rulebook, whilst at the same time demonstrating to the world that we both remain convinced by the benefits of open trade."

The president of the European Commission, Jean-Claude Juncker, said: "The new agreement will give consumers greater choice and cheaper prices; it will protect great European products in Japan and vice-versa, such as the Austrian Tiroler Speck or Kobe Beef; it will give small businesses on both sides the chance to branch out to a completely new market; it will save European companies 1 billion euro in duties every year and turbo-boost the trade we already do together."

Trade groups also welcomed the move.

"This agreement is the perfect example that building bridges is better than raising walls," said Pierre Gattaz, president of BusinessEurope. "When protectionism is on the rise, the EU and Japan show to the world they remain open to modern and rules-based trade."

Hiroaki Nakanishi, chairman of the Japan Business Federation, said the agreement "will stimulate additional growth and create jobs for both sides."

China's ODI was down 29.8 percent year on year to 14.91 billion U.S. dollars in November, Gao said, attributing the fluctuation to change in investment structure.

He said China's ODI in the first 11 months had remained flat with 2017.

Domestic investors made 104.48 billion U.S. dollars of non-financial ODI in 5,213 overseas enterprises in 157 countries and regions from January to November, earlier MOC data showed.

The structure of outbound investment continued to improve, with investment mainly going into leasing and business services, manufacturing, mining, and retail and wholesale sectors, according to the ministry.

No new projects were reported in sectors such as property development, sports, and entertainment.